August 28: In the fiscal year 2022/23, an astonishing 771,000 young individuals embarked on foreign employment from Nepal, according to the Department of Foreign Employment (DoFE). This figure includes both new and re-permit workers who acquired work permits during the fiscal year 2022/2023.
Comparatively, during the preceding fiscal year 2021/22, a total of 637,133 workers pursued foreign employment. This reflects a substantial increase of 134,214 individuals opting for work permits abroad compared to the year before.
Nepal has about 200 years of history of its young individuals seeking employment opportunities abroad. During this period, Nepali men ventured to foreign lands for various reasons, including work and participation in world wars.
Many youths went to India to find employment, and some even served as soldiers in the First and Second World Wars. Despite this long history, official records about the population's migration to India and other countries for jobs in the nineteenth century are lacking.
The Department of Foreign Employment reveals that in 1993-94, only 3,605 Nepalis left the country for jobs abroad. This trend began to shift after 2000, when the Maoist insurgency that started in 1996 reached its peak.
In the fiscal year 2000-01, over 55,000 Nepalis went abroad due to the country's economic challenges resulting from the conflict. Over the last two decades, remittance inflows have grown significantly. In 2000-01, remittances Nepal received stood at Rs 47 billion.
However, in the fiscal year 2022/2023, remittance inflow has surged to Rs 1220.56 billion, as reported by Nepal Rastra Bank. Popular job destinations for Nepali youths include Qatar, Malaysia, Saudi Arabia, UAE, and South Korea.
Role of Remittance in Nepal's Economy
Remittance serves as the backbone of Nepal's economy and correlates with improved health and social indicators. With a consistent inflow of remittances, Nepal has experienced transformation across various sectors, including poverty reduction, increased consumption, and bolstered foreign exchange reserves.
Contribution to GDP: Remittances play a crucial role in Nepal's economy, significantly contributing to the Gross Domestic Product (GDP). They represent a stable and growing source of foreign exchange earnings, often constituting a substantial portion of Nepal's overall GDP. In the fiscal year 2022/2023, remittance's contribution to Nepal's GDP was 22%.
Poverty Alleviation: Remittances have been instrumental in reducing poverty and enhancing the living standards of many Nepali households. Families receiving remittances often witness a rise in disposable income, which can be directed towards education, healthcare, housing, and other essential needs.
Nepal's poverty rate decreased from 25.2% in 2010 to 16.6% in 2019, largely attributed to increased remittance earnings, according to a study.
Household Consumption: The influx of remittances stimulates household consumption, driving demand for goods and services across various sectors. This increased demand can fuel economic growth, generate jobs, and create business opportunities.
A survey by Nepal Rastra Bank in 2014-15 revealed that 23.9% of remittance funds were spent on essentials like food and clothing.
Foreign Exchange Reserves: Remittances contribute to building and maintaining Nepal's foreign exchange reserves, crucial for stabilizing the country's currency and managing its balance of payments. Adequate foreign exchange reserves ensure import stability and economic resilience.
In the fiscal year 2022/2023, remittance inflow reached Rs 1220.56 billion, bolstering Nepal's foreign exchange reserves, which stood at Rs 1539 billion.
Investment and Savings: Remittances encourage increased savings and investment within Nepal. Some households receiving remittances allocate funds to start businesses, invest in agriculture, or make other productive ventures.
Real Estate and Construction: A portion of remittances often flows into the real estate and construction sectors. Remittances sent by migrant workers have driven growth in Nepal's real estate sector, particularly in urban areas like Kathmandu, where property purchases and construction have surged.
Education and Skill Development: Remittances enable families to invest in education and skill development. Many migrants send money back home to support their children's education, contributing to the country's human capital development.
The increase in private English-medium schools in Nepal is attributed to remittances from migrant workers. Many uneducated migrant workers working in the foreign lands have sent their kids to pursue higher education in the USA, Australia, Canada and the United Kingdom with remittances.
Challenges and the Path Ahead
While remittances yield numerous benefits, they also bring challenges. Nepal's economy has grown reliant on remittance inflows, rendering it susceptible to global economic fluctuations and shifts in migration patterns.
To address this, policymakers and stakeholders must collaborate to diversify the economy, promote domestic industries, expand tourism, and create an environment conducive to sustainable growth.
Furthermore, while the demand for Nepali labor abroad is increasing, challenges such as bureaucratic hurdles and political deadlocks within Nepal persist.
To mitigate these challenges, Nepal should expedite Government-to-Government (G2G) labor agreements with new destination countries, ensuring fair treatment and suitable compensation for migrant workers.
It's also essential to ensure that Nepali migrant workers are equipped with the necessary skills and knowledge before heading for foreign employment to secure higher-paying jobs that match their expertise.
